In a move to further liberalise the financial services sector, the Central Bank of Myanmar will start issuing the third round of foreign bank licences from next year allowing overseas lenders to open subsidiaries in the Burmese market.
Foreign banks can apply for licences to set up either a branch or a subsidiary.
To secure a subsidiary licence, foreign lenders will be required to maintain a minimum paid-up capital of $100 million. Banks will be allowed to operate both onshore wholesale and retail banking, with the latter scheduled to start from January 2021. Subsidiaries can set up 10 entities including branches or off-site ATMs.
Meanwhile, the licence norms to set up a branch remain unchanged. Overseas banks need to maintain a minimum paid-up capital of $75 million with $40 million locked up for two years with the Myanmar central bank.
Furthermore, existing bank branches, which have been in operation for three years in Myanmar, will be allowed to convert into a subsidiary from June 2020.
The decision to further liberalise the local banking market is “in line with the Myanmar Sustainable Development Plan”, the central bank said.
From January 1 next year, the apex bank will also consider increasing the foreign ownership limit in domestic banks to beyond 35 per cent on a case by case basis.
Since 2014, Central Bank of Myanmar has conducted two rounds of stringent licensing process, providing branch licences to 13 financial institutions in the Asia-Pacific to operate wholesale banking business in the frontier market.
Myanmar has 45 foreign banks that have established representative offices in the country. The country has four state-owned banks: Foreign Trade Bank, Investment and Commercial Bank, Economic Bank and Agriculture and Development Bank.